Diamond Hill site attracts interest

THE huge Diamond Hill site which goes under the hammer at today's government auction is expected to fetch up to HK$4 billion.

The larger of the two lots, which has a maximum gross floor area (GFA) of 1.7 million square feet, has attracted considerable interest.

The size of the site will put it out of the grasp of all but the largest developers, such as Sun Hung Kai, Cheung Kong and Henderson Land.

However, it raises the interesting possibility of a consortium bidder.

Rival developers have joined forces on the auction floor several times in the past, negotiating deals as they continued to bid against each other.

Sino Land chairman Mr Robert Ng struck such deals with World International director Mr Ray Tse in October, 1991, and Mr Albert Chow, deputy managing director of Cheung Kong, in January last year.

Although such deals create an atmosphere of excitement in the auction room, they ultimately keep the price lower than it would otherwise be.

The New Kowloon Inland Lot 6160 at Lung Poon Street in Diamond Hill, Kowloon, is designated simply for non-industrial use, excluding godown and petrol filling-station use.

However, the developer will be required to include a pedestrian walkway, a public transport terminus including an MTR station entrance, a public toilet, a kindergarten and an open space.

Other specifications are that the GFA for residential purposes and for non-industrial purposes should not exceed 1,157,119 sq ft and 561,876 sq ft respectively.

In practice, the non-industrial element would probably mean a retail complex of some sort because of the proximity to the MTR, and residential developments.

Mr William Wong, associate at Brooke Hillier Parker in charge of valuations, said the market generally felt the site was worth about $3 to $4 billion, although his company's estimate was more in the region of $3.6 billion.

He said it would depend on the attitude of the developers, as very few could afford it.

A consortium could mean a lower price than estimated. In the present political situation, banks would be unwilling to finance such a large project.

However, he said it was one of the largest sites in the Kowloon urban area and next to an MTR station; all the neighbouring areas were densely populated without commercial facilities, so demand would be strong.

Ms Julie Baldwin, valuations director at Colliers Jardine, said the extra requirements of a library and refuse collection point attached to the San Po Kong site at last month's auction had not deterred bidders unduly.

She did not think these would affect the price, particularly as the Government would reimburse the developer for some of them.

She estimated a final price of around $3.1 to $3.2 billion and cited previous occasions of auction-room joint deals.